As discussed in Part I of this series on insider trading investigations, hedge funds and other institutional investors rely upon various sources of information in connection with their investment research activities.1 Part I discussed the ways investors use political intelligence firms, the risks associated with the use of such firms, and several practices investment firms can consider adopting to mitigate those risks. Another related resource for hedge funds and other institutional investors as they conduct investment research includes so-called expert network firms. When used properly, these expert network firms provide useful market color about a company or industry without providing investors any inside information. The use of such firms can also present heightened risks of government scrutiny and insider trading liability.
1 Arian June, Trends in Insider Trading Investigations Part I: How to Navigate Political Intelligence, 45 Sec. Reg. & L. Rep. 287 (BNA) (Nov. 4, 2013).
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Originally published in the December 9, 2013 edition of Bloomberg BNA's Securities Regulation & Law Report
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